A view toward the Malvern Hills: the UK's natural environment is worth £30bn a year in health and welfare benefits alone Photograph: David Cheshire/Alamy

Environment secretary Owen Paterson had, I'm told, battled hard in the fight over which departments' budgets would fare the worst in Wednesday's spending review. He failed. One insider told me: "Paterson was lucky to escape with a department at all."

George Osborne inflicted the highest level of budget cuts – 10% - on the Department for Environment, Food and Rural Affairs (Defra), alongside a few other unfortunates – just as he did in the 2010 spending review.

The casualties will be flood defences - in the short term at least - protecting nature and fighting pollution. Treasury documents say spending on maintaining flood defences "will remain at current levels in cash terms" in 2015-16. That's a real term cut. The capital budget - which would fund new defences - also appears static for 2015-16 and follows the more than 25% year-on-year cuts in flood defences gouged out in 2010. That left nearly 300 shovel-ready projects that had been in line for funding unbuilt. Pile onto that more big cuts for local authorities, who are meant to be providing some funding, and there's a big, wet hole being dug.

In November, Osborne smelled both the danger - imagine a disastrous flood in a place that should have been protected - and the opportunity and added £120m to the flood defence budget. In Wednesday's spending review, he promised to "set out plans for a major commitment to new flood defences for the rest of this decade" on Thursday, as part of the infrastructure plans. Without the pledge of a lot of new money, such a commitment will be meaningless.

Flood defences are big ticket items and another big chunk of Defra's spending is farming payments, which are fixed by the Europe Union. Paterson also has the soaring cost of the planned badger culls to cover and the rising threat of invading animal and plant diseases, like Schmallenberg virus and ash dieback. This means the new cuts will inevitably fall on those services protecting wildlife and nature and preventing water and air pollution. The Environment Agency and Natural England have already lost many thousands of staff.

What this means is all that talk about valuing the economic value of the natural environment from this coalition government appears to be nothing but hot, filthy air. That is deplorable given the trumpeting of its own assessment of that value - £30bn a year in health and welfare benefits alone.

Instead, the Treasury said Defra "would be prioritising spending on economically high-value areas", but did not specify any. Previously, Paterson has highlighted boosting the rural economy and food production by "getting out of people's hair" - i.e. deregulating. That's the theory. The practice, as the horsemeat scandal and dreadful ash dieback invasion has shown, is that in crucial areas we appear to be poorly regulated.

Matthew Spencer, at the sober-minded Green Alliance, told me: "A combination of big cuts and shifting ministerial priorities mean that Defra is a shadow of its former self. Their ability to steward the natural resources base of our economy reduces as each year goes by, and it may be time to consider how to create a new and more powerful department for natural resources."

The new cuts to Defra comes on a day when attempts to reform the vast sums of money given to European farmers via the Common agricultural policy appears to have done less than nothing to make CAP greener.

Over at the department of energy and climate change, which fared a little better under Osborne's knife, little appears to have changed. That is unsurprising given that it is me and you - energy bill payers - who will be paying for the promised new energy infrastructure.

We'll learn more on Thursday, though the strong, intoxicating smell of fracking fumes were already curling around Osborne today, when he said: "We [will] make the tax and planning changes which will put Britain at the forefront of exploiting shale gas."

Will local communities have their ability to object to shale gas exploration reduced just as those objecting to wind farms are supposed to have had their ability to object strengthened?

What's the root cause of all of this green contempt? This "greenest government ever" resolutely refuses to accept the 21st century reality expressed by US president Barack Obama on Tuesday: "The old rules may say we can't protect our environment and promote economic growth at the same time, but ... we've used research and development and discovery to make the old rules obsolete."